March 9 (Bloomberg) -- Democratic presidential candidate John Kerry said the cost of prescription drugs in the U.S. is creating ``a crisis'' that can be eased by letting the federal government negotiate lower prices from drugmakers and allowing states to import medicines from other countries.

``We are not doing what we ought to be doing to provide a legitimate competitive playing field where the American people have affordable medicine available to them,'' Kerry told about 100 senior citizens at a forum in Evanston, Illinois.

Kerry was campaigning in Illinois ahead of the state's Democratic primary election next week. The Massachusetts senator, 60, spoke as voters were casting ballots in Florida, Texas, Louisiana and Mississippi for the Democratic presidential nominee. Kerry is the only major contender left in the race.

The cost of health care has been one of the main themes for Kerry's presidential bid. Drugmakers including Pfizer Inc. and Eli Lilly & Co. are fighting proposals in Congress to allow importation from Canada, where government price controls keep drug costs lower than they are in the U.S. More than 1 million people in the U.S. buy prescription drugs in Canada despite regulations forbidding the practice.

President George W. Bush, 57, and Kerry are set to face each other in the November general election. A Cable News Network-USA Today survey conducted March 5-7 found that 52 percent of voters said they were likely to vote for Kerry and 44 percent said they probably would vote for Bush.

Issue for Voters

On health care, 55 percent in the CNN-USA Today survey said Kerry would handle the issue better and 36 percent said Bush would. Other polls have shown voters say health care is the second most pressing issue for them after the economy.

Illinois Governor Rod Blagojevich, 47, a Democrat who joined Kerry at the forum, has supported efforts in his state to organize a discount-buying group for seniors and has sought permission from the federal government to buy drugs in Canada for state employees.

Kerry said Bush and his fellow Republicans in Congress have sided with the pharmaceutical industry against the interests of senior citizens to block measures that would lower drug prices.

Medicare Law

Legislation backed by Bush to add a drug subsidy to the government's Medicare program for those 65 and older prohibits the U.S. government from directly negotiating lower prices from drugmakers. Mark McClellan, the head of the Food and Drug Administration, has opposed efforts to allow importation of drugs from Canada and led efforts to crack down on U.S. businesses that facilitate such purchases.

Bush ``stubbornly refuses to allow the re-importation of drugs from Canada while prices are steadily going up,'' Kerry said.

U.S. House Speaker Dennis Hastert, an Illinois Republican, issued a statement criticizing Kerry for missing the final vote on the Medicare legislation, which passed the Senate 54-44.

``Does that mean lowering the costs of prescription medications for seniors just isn't an important enough issue for John Kerry to find the time to vote for?'' Hastert, 62, said.

Kerry has pledged that the first piece of legislation he'd send to Congress if elected would be a bill to extend health-care coverage to most Americans. His plan calls for the federal government to take over coverage of some of the most expensive cases as well as insure poor children. States would have responsibility for more of the uninsured adults.

Leverage

The federal government also should use the leverage of the Medicare program, which covers 41 million elderly and disabled Americans, to get discounts from drug companies, Kerry said.

As another measure to reduce prices, Kerry said he would require pharmacies to disclose financial discounts and sales incentives they receive from drugmakers.

To pay for new programs, Kerry says he would repeal tax cuts enacted under Bush for people with incomes of more than $200,000 a year.

The cost of drugs is a prominent issue in the race to replace Illinois Republican Senator Peter Fitzgerald, who is not seeking another term.

Hull Group Inc. founder Blair Hull, one of the seven Democrats vying for the Senate nomination, has been leading bus trips of senior citizens to Canada to buy prescription drugs. U.S. consumers imported about $650 million worth of drugs in 2002 from Canada, according to the research firm IMS Health Inc.

Still Profitable

``Drug prices in Canada are half what they are here and the fact that we let the drug companies con us into believing that's okay is amazing,'' Hull said in a telephone interview.

Provincial governments in Canada are allowed to negotiate prices with drug companies, Hull said. ``Nobody is legislating that Abbot labs has to sell drugs to Canada,'' he said. ``Abbott Labs is selling drugs to Canada because the profit exceeds the marginal cost. That's what business is about.''

Alan Sager, director of the Health Reform Program, at Boston University's public health school, estimated last year that drugmakers' profits are reduced by about 40 percent in Canada.

Having won 27 of the 30 Democratic primary and caucus votes so far, Kerry may have enough party delegates to clinch the nomination after the March 16 Illinois contest.

At stake in today's four Southern state primaries are 465 pledged delegates. Illinois will award 156 delegates. Kerry needs 2,162 delegates to be officially named the Democratic Party's nominee at the national convention in July.

A count by Cable News Network gives Kerry 1,626 delegates, including pledged delegates awarded proportionately based on primary and caucus voting and the votes of party and elected officials known as super delegates.

To contact the reporters on this story: William Roberts in Evanston, Illinois, at wroberts@bloomberg.net

Last Updated: March 9, 2004 18:13 EST